Oil refiners sentenced to 'extinction'

Date: November 20 2012

Paddy Manning

AUSTRALIA'S oil refineries have been ''sentenced to extinction'' and the country needs to decide if it wants to keep its refining capacity.

That's the opinion of the chairman of FACTS Global Energy, Dr Fereidun Fesharaki, who said the refining business was in difficulty globally but Australia faced added problems because its refineries were small and old, growth was non-existent and an ''unreasonable [competition] regulator does not allow aggregation''.

Dr Fesharaki said Australian refineries typically had the capacity to process only 100,000 barrels of crude oil a day, but most modern refineries processed 400,000 barrels a day.

''It is only a matter of time before [the remaining Australian refineries] go out of business,'' he said.

Australia has gone from eight to five oil refineries over the past decade, including two closures in the past year - Shell's Clyde refinery, and Caltex's Kurnell, both in Sydney.

The federal government's energy white paper, released this month, concluded Australia's ''lack of oil self-sufficiency and the prospect of further refinery rationalisation does not in itself compromise or reduce our energy security''.

Dr Fesharaki said the government ''doesn't seem to care if everything closes down''.

Yet Australia could be vulnerable because ''you are so far away from everywhere, and because your environmental specifications are higher than everywhere else''.

With increasing concern about energy security, Dr Fesharaki said, ''nobody else in the world is allowing wholesale reduction of its refinery capacity''.

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